State-owned telecommunications company, PT Telekomunikasi Indonesia (Telkom) expects to control up to 60 percent of the mobile phone market in Timor Leste in five years through its newly established subsidiary Telekomunikasi Indonesia International (Telin).

Telin’s operation in the former Indonesian province was officially inaugurated in Dili on Thursday with the presence of PT Telkom’s president director Arief Yahya and State-Owned Enterprises Minister, Dahlan Iskan.

Telin, which offers mobile communication services under the brand Telkomcel, will spend up to US$50 million to build the relevant infrastructure, Arief said. He added that a majority of the funds would establish the necessary infrastructure, from base transceiver stations (BTS) to setting up customer service call centers.

“To date, we have set up 30 BTS, all in Dili,” he said, adding that the company would increase the number of BTS to 110 units to cover 95 percent of Timor Leste by the end April.

“Our BTS are equipped with 2G and 3G services,” he said.

Mobile penetration in Timor Leste is 54.9 percent. The country has around 602,481 mobile phone subscribers, only 4,456 of them subscribe to mobile Internet services. Before Telin’s entrance, the Timor Leste market was served by Timor Telecom, a Portuguese telecommunication company.

Arief added that Telkom targeted to acquire at least 4,000 subscribers this year. “However, 20,000 subscribers have signed up with us when we offered the service for free during the pre-launch period,” he said, adding that the company expected 80 percent of subscriptions to be non-data.

The company aims to obtain around 60 percent of the Timor Leste market by 2018.

“Generally, telecommunication companies reach break even point [BEP] in five years,” Arief said.

He added that Telkom would be able to win competition in the market because the company, unlike their competitor, could provide stronger telecommunication networks. “We could connect our network to our network in Nusa Tenggara Timur, linking Timor Leste to networks in Indonesia,” he said.

Arief said that the company saw potential in garnering income from operations in the country, given that the monthly average revenue per user (ARPU) of $10. “Indonesia’s ARPU is only Rp 35,000.”

He added that the company expected mobile phone subscriptions to increase as more of the country was covered by telecommunication services. Through Telin, Telkom would expand their services to Australia in the following week. However, he declined to reveal any more details.

Telkom has expanded to Hong Kong, Malaysia and Singapore.

The population of Timor Leste, currently at least 1 million, grows by a rate of 2.4 percent annually. Sam Saba, the president director of Ericsson Indonesia, added that Timor Leste was a potential market as it undergoes growth. Ericsson is supplying Telkom with the equipment for its operations in Timor Leste.

“We have clear evidence that every new expansion in the mobile industry adds to development of an economy,” he said.

Dahlan said that the investment marked the “tightening of relations between Indonesia and Timor Leste”.

“The entrance of Telkom into Timor Leste has augmented the number of Indonesian state-owned enterprises with operations here,” he said.

He noted that construction companies, PT Wijaya Karya and PT PP, in addition to Bank Mandiri, ran business in Timor Leste.

“The entrance of Telkomcel will also enable Bank Mandiri to expand their presence here, given that the necessary infrastructure to conduct banking services is now available,” he said.

Furthermore, Timor Leste Transportation and Communication Minister, Pedro Lay da Silva, said that investment in telecommunications was an integral part of accelerating the economy of Timor Leste.

“These networks improve our country’s connectivity not only within, but also outside,” he said.

Timor Leste, which proclaimed their independence from Indonesia in 2002, has a gross domestic product (GDP) per capita of $4,315 in 2011.

“We are looking forward to new services on offer to our people,” he said, adding that having a second telecommunication operator in the country would allow competition resulting in providers offering better services at lower prices for the people.